Liberian President Charles Taylor has confirmed that rebels attacked a town close to the capital and vowed "tough resistance" to any attack on Monrovia itself.

There were scenes of panic in Monrovia on Monday as the sound of artillery and mortars arrived from the village of Arthington, President Taylor's home town, just 25 kilometres north of the capital.

Businesses and schools closed down and police cars toured the streets in a bid to calm people's fears as army reinforcements left for the front.

Mr Taylor also said the country's second city, Gbarnga, was under government control despite reports that it had fallen.

In a radio broadcast, he said troops had killed "close to 100" rebels from the Liberians United for Reconciliation and Democracy movement (Lurd) in Gbarnga.

Panic

Panic has gripped Monrovia since reports over the weekend that the rebels had captured Gbarnga, once Charles Taylor's stronghold, and the town of Klay, just 40km north of the capital.

International aid workers could not confirm on Monday who was in control of Gbarnga, 80km from Monrovia.

Charles Taylor is a former rebel leader himself

Children in the capital were taken out of schools and residents prepared to flee as soldiers bristling with rocket-launchers sped out in military vehicles towards the fighting.

At one point, Defence Minister Daniel Chea himself ran out into the streets to order troops to turn off flashing lights on their vehicles, saying it was adding to
the panic.

"I saw people running so I had to leave as well," said a woman with two children who was trying to get to the Sinkor suburb.

"You cannot see people running and begin to ask questions. You have to also leave as well."

President Taylor appealed for calm, saying he would not let the city "be placed in a chaotic position".

He reportedly toured Monrovia himself in a heavily guarded convoy.

Lurd spokesman William Hanson said it could easily take the capital but was holding back to avoid civilian casualties.

The rebels are believed to be made up of fighters and politicians from the losing side in Liberia's 1989-96 civil war with at least some support from neighbouring Guinea.

They accuse Mr Taylor of destabilising western Africa.

Army under pressure

In February, Mr Taylor declared a state of emergency in the diamond-rich country as the fighting created thousands of refugees.

Ten men have to rely on one rifle to fight
the rebels

Government soldier

The Liberian army is being hampered by a UN arms embargo imposed one year ago to counter Mr Taylor's support for Sierra Leone's rebel Revolutionary United Front.

The United Nations Security Council voted unanimously last week to renew the embargo.

A Liberian solider told the BBC that "up to 10 men have to rely on one rifle to fight the rebels".

There have been sporadic clashes between rebel groups operating from bases in Guinea and forces loyal to Mr Taylor for nearly two years - the latest episode in a cycle of war in the diamond-rich triangle of Liberia, Sierra Leone and Guinea.